So what is short selling or shorting anyway? While most experienced or veteran investors know that this is how you profit from a declining stock price, not a lot of beginners know how it works so we’ll discuss the basics of short selling here.

Most people know the stock market as a place where you buy and sell partial ownership of businesses, also known as “stocks”. Unfortunately, most people get the idea that the stock market’s price changes are random and that investing is no better than playing the lottery. While you KNOW some people can profit by investing in it, you might think that if YOU try you’ll end up losing… BADLY.

Well, if you understand how the stock market works and why it moves the way it does, then you can have realistic expectations and you’ll minimize the risks you’ll face when investing.